Protect the Federal-State-Local Partnership for Medicaid

ACTION NEEDED:

Urge your Members of Congress to support the federal-state-local partnership structure for financing and delivering Medicaid services and to oppose any measure that would further shift federal and state Medicaid costs to counties – including cuts, caps, block grants and new limits on counties’ ability to raise the non-federal match or receive supplemental payments.

BACKGROUND:

Medicaid is a federal entitlement program administered by states, with assistance from counties, that provides health and long-term care insurance to over 83 million low-income families and individuals, or one in five Americans. Authorized under the Social Security Act, Medicaid is jointly financed by federal, state and local governments, including counties. For FY 2021, states and local governments contributed to over a third of the $728 billion in total Medicaid expenditures. During the Great Recession, contributions to the non-federal share increased by 21 percent as more than 10 million additional people enrolled in Medicaid. Likewise, now, during the ongoing COVID-19 pandemic, enrollment in Medicaid has increased by nearly 20 percent, effectively raising contributions to the program by counties and other local governments.
Counties take our responsibility seriously for protecting the health and well-being of our 314 million residents and annually invest more than $80 billion in community health. Through over 900 county-supported hospitals, 758 county-owned and supported long-term care facilities, 750 county behavioral health authorities and 1,943 local public health departments, counties deliver health services, including to those that are eligible for Medicaid reimbursement.

While the federal government sets broad guidelines for Medicaid, states have the flexibility to expand benefits or eligibility. For instance, states must provide physician, hospital and nursing facility services, but can also cover services such as prescription drugs, dental and vision care. Traditionally, Medicaid has served three categories of low-income populations: (1) families, children and pregnant women, (2) the elderly and (3) those with disabilities. However, under the Affordable Care Act, 40 states and the District of Columbia have exercised their option to expand coverage to low-income adults without children. Counties may contribute up to 60 percent of the share of Medicaid costs that are not covered by the federal government in each state (also called the non-federal share) and counties contribute to Medicaid in 13 states. Of these, 10 mandate counties to contribute to the non-federal share of Medicaid costs and/or the administrative, program, physical health and behavioral health costs.

Medicaid benefits local economies by increasing access to health care services for low-income, uninsured, or underinsured residents, which in turn improves residents’ health, productivity and quality of life. In addition, Medicaid reduces counties’ costs for providing otherwise uncompensated care, including those mandated by state laws. Patient revenue from Medicaid also helps counties retain doctors and other health professionals, especially in rural and underserved areas. In the 115th Congress, Medicaid was targeted for major cuts. Health legislation introduced in 2017 would have cut federal funding for Medicaid by one-fourth, or $800 billion, over the next decade. While these efforts were ultimately unsuccessful, they normalized methods for changing the Medicaid program through methods such as a per capita cap or block grant. Under a per capita cap, states would receive a fixed amount of federal funding per beneficiary category. Under a block grant, states would receive a fixed amount of federal funding each year, regardless of changes in program enrollment and mandates. These measures would further shift costs to counties and reduce counties’ capacity to provide health services to their residents.

In addition to attempts to cut federal funding for the program, in 2018, CMS under the Trump Administration announced it would support state efforts to introduce Medicaid work requirements and sought to modify Medicaid financing through other regulatory efforts which included allowing states to have waiver authority to implement block grants for certain Medicaid populations, and changing the way that states finance the non-federal share of Medicaid. As of January 2022, the Biden Administration has currently revoked Medicaid work requirements in 9 of the 12 states that had previously obtained approval for the change, and 2 states have withdrawn their application. Tennessee was the only state to have their Medicaid block grant waiver approved, and the proposal is currently under review by the Administration. State implementation of Medicaid work requirements, block grants, and other restrictions could increase the administrative burden for counties, as well as costs associated with uncompensated care.

COVID-19 ENROLLMENT & ENHANCEMENTS TO THE PROGRAM:

As result of the COVID-19 pandemic, the Medicaid and CHIP programs grew by 18.7 percent, adding nearly 10 million enrollees. To assist states and localities provide necessary medical coverage to new and existing enrollees, the Families First Coronavirus Response Act (P.L. 116-127) provided a 6.2 percentage point increase in the federal share of Medicaid spending (FMAP) for the duration of the national public health emergency, provided certain eligibility requirements are met for the program including coverage for COVID-19 testing, treatment and vaccinations. Adjustments such as this to the Federal share during health emergencies and economic downturns are key to sustaining vital health services for local residents and protect the integrity of the Medicaid program.

The FY 2023 Omnibus spending bill provided funding and requirements for state Medicaid programs to support the transition from the enhanced Medicaid funding and continuous coverage requirements of the FFCRA after the public health emergency ends. States will continue to receive a phased down enhanced FMAP throughout 2023 to begin the process of initiating redeterminations of eligibility. The 6.2 percent FMAP increase will become a 5 percent increase from April 1, 2023 through June 30, 2023, then to a 2.5 percentage point increase from July 1, 2023 through September 30, 2023, and then to a 1.5 percentage point increase from October 1, 2023 through December 31, 2023.

The spending bill also included provisions to require states to provide 12 months of continuous coverage in Medicaid for children and permanently extended the state option to provide 12 months of continuous coverage in Medicaid for post-partum women originally provided in the American Rescue Plan Act of 2021.

KEY TALKING POINTS

• Medicaid is already a lean program. Medicaid’s average cost per beneficiary is significantly lower than private insurance, even with its comprehensive benefits and lower cost-sharing. Counties have made the most of Medicaid’s flexibility by leveraging local funds to construct systems of care for populations that private insurance does not cover. New limits on counties’ ability to receive supplemental payments or raise the non-federal match (e.g., through intergovernmental transfers or certified public expenditures) would compromise the stability of the local health care safety net.
• Imposing spending caps on Medicaid will not address the underlying drivers of the program’s costs. Caps do not account for long-term trends like the aging population and rising health care costs that are projected to drive higher federal entitlement spending in the coming years. Complying with a cap designed to significantly reduce the deficit would require major cuts to the federal contribution. States and ultimately counties would absorb this cost shift.
• Implementing a Medicaid per capita cap or block grant would not reform Medicaid but would merely shift expenses to state and county taxpayers. Previous legislative proposals would have cut approximately $800 billion in federal funding for Medicaid over the next ten years. States would be forced to increase health care spending beyond their capacity, resulting in decreased access to care for beneficiaries. This would shift costs to county taxpayers and reduce counties’ capacity to provide health care services – including those mandated by state laws.

• 2022 Policy Brief_Protect the Federal State Local Partnership for Medicaid!.pdf
• 2023 Policy Brief_Protect the Federal State Local Partnership for Medicaid_final.pdf